The amount of private equity invested in the first quarter of 2014 doubled year over year. Private equity investments totaled $4.6 billion in the first three quarters of 2014, double the $2.3 billion in values reported at the same time in 2013. The number of deals done in Q1 was slightly higher year over year as well, totaling 77, up 3% from Q1 2013.

The significant growth in the amount invested in Q1 2014 owed to a number of major transactions. The most predominant of these included two previously-announced $1 billion -plus deals (representing 56% of all disbursements) - the acquisitions of Patheon Inc. and Atrium Innovations Inc.

While these two deals led to the health and life sciences representing the majority of amount invested, actual deal activity was led by oil and gas (13 deals), manufacturing (12 deals) and IT (9 deals). These three sectors represented a combined 44% of the total number of deals.

Domestic private equity investors continue to account for the significant majority of the activity, representing 76% of the total deals in Canada in Q1. Canadian funds were also generally more active in global deal-making. Canadian funds led or participated in a total of 19 transactions abroad, with these reflecting values of approximately $3.1 billion in Q1 2014 versus $2.1 billion in Q1 2013.

Following record-breaking fund-raising results in 2013, Canadian private equity sustained high levels of market activity into the first quarter of 2014. New capital committed totaled $3.5 billion in Q1 2014, which is more than triple the $1.1 billion committed to funds at the same time in 2013.

"We are very pleased to see the ongoing, robust growth in private equity investment in Canada that is helping fuel productivity in Canada ," said Mike Woollatt , CEO of CVCA. "The Canadian private equity industry is seeing substantial returns based on solid investments and that is in turn being reflected in the very strong fundraising activity as well."

VENTURE CAPITAL

The amount of venture capital invested in Q1 2014 totaled $378 million spread over 122 deals. This represented a moderate 2% year over year growth in the amount invested, however the number of deals were up a substantial 16% over Q1 2013.

The first three months of the year saw several major financings, including those backing Edmonton -based Aurinia Pharmaceuticals, Vancouver -based BuildDirect, and Dorval , Québec -based Clementia Pharmaceuticals.

Analogous to the larger increase in number of deals versus the amount invested, the average deal size in Q1 was relatively small. Both Canadian investors ( $1.4 million average deal size) and US investors ( $3.9 million average deal size) showed a significant decrease in average deal size from 2013. Only life sciences saw an increase in deal size, while information technology, clean tech and traditional sectors all declined.

In terms of investment rounds, Series A continues to receive the lions share of venture capital investment, representing 37% of the 122 deals in Q1. Q1 2014 also saw more investment from outside Canada and the US, with an increased share of global venture capital investment into Canada .

Information technology and life sciences saw the biggest growth in investments and drove venture capital investment in Q1, representing a combined 87% of total invested. Within life sciences, human biotech is dominating the activity, representing nearly 90% of the life science investment in Q1. This reflects a similar trend to that seen in the US and elsewhere.

On the fundraising side, the news was also positive, particularly in private VC, which raised $393 million in Q1 2014, representing 56% of all of 2013 ( $699 million ).

"Venture capital is certainly on a prolonged uptick in Canada , which is great for Canadian innovation," said Mike Woollatt , CEO of CVCA. " Canada's venture capital has a long way to go to solve our relative undercapitalization, but these numbers are heartening."

CVCA

The CVCA is the voice of Canada's venture capital and private equity industry. The CVCA's members manage the vast majority of private capital that is designated to grow Canadian businesses. The CVCA fosters professional development, networking, communication, research and education, and represents the venture capital and private equity industry in public policy matters. The CVCA was founded in 1974. www.cvca.ca

Thomson Reuters

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